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Home price growth slows as steel dips

The construction price index for standard homes increased by 1.5% year-on-year in the third quarter of 2023, continuing a four-quarter slowdown, with a major contributor being lower prices of steel and sanitaryware.

According to the Real Estate Information Center (REIC), the construction price index in the third quarter of 2023 was 134.2, a 0.1% increase from the second quarter of 2023 and a 1.5% increase from the third quarter of last year.

“The primary factor for the year-on-year increase was the price of architectural design jobs, which rose 3.6%, while three other jobs decreased,” said Vichai Viratkapan, acting director-general of the REIC.

The other three jobs comprised structural engineering, sanitary systems, and electrical and communication systems, with prices declining by 2.6%, 1.7% and 0.1%, respectively.

For the prices of construction materials, tiles had the largest year-on-year increase, rising by 16.6%, followed by wood and wood products, gaining 4.8%, and other construction materials, increasing 2.6%.

Steel and steel products had the largest year-on-year decline in prices, falling 9.6%, followed by sanitaryware, dipping 8.9%.

Concrete products and electric and water supply equipment posted a slight decrease in prices, at 1.1% and 1%, respectively.

“The decline in steel prices was attributed to global market price adjustments, in line with supply and demand as a glut of steel resulting from the property crisis in China reduced steel demand in the country,” he said.

As a result, some of the surplus steel supply from China was delivered to Thailand, said Mr Vichai.

In addition, a drop in diesel prices affected production costs and the prices of various construction materials, leading to a decline in steel prices in Thailand.

According to REIC, labour costs, which account for 39.7% of the construction prices for standard homes, increased slightly in the third quarter of 2023, rising by 1.1% year-on-year.

The government’s vow to raise the daily minimum wage to 400 baht has sparked concerns among both developers and homebuilders, stated the centre.

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